Covid-19 pandemic to push Singapore into recession despite low number of infections
Finance minister dips into ‘rainy day’ fund for stimulus package
Singapore is set to enter into its first recession in 20 years as a result of the Covid-19 pandemic, according to recent data.
The densely populated Asian city-state of 5.6 million people has seen comparatively few infections from the novel coronavirus, with only two deaths from 683 confirmed cases.
Having experienced the SARS outbreak in 2003, Singapore was much more ready to stem the spread of Covid-19 than other nations. Within days of reports from China of the dangerous virus the government imposed strict border controls, meticulously traced known carriers and mobilised its up-to-date and speedy testing infrastructure.
While Singapore has been able to avoid the wide-scale lockdowns which have hemorrhaged many economies throughout Asia, Europe and North America, it still suffered its largest quarterly economic drop since the 2009 financial crisis.
The economy of the city-state contracted by 2.2 per cent in Q1 when compared with the year before and 10.6 per cent on a quarterly basis, in large part because of its exposure to the winds of global markets.
As a champion of free trade, Singapore has one of the most competitive and innovative economies in the world. Such openness also means that the trade-reliant city has struggled to operate fully as major nations temporarily shut down.
Singapore’s trade ministry stated: “The Covid-19 outbreak has escalated and led to a significant deterioration in the economic situation both externally and domestically.”
With the government drawing on national reserves to deliver a stimulus package worth more than $60bn (£49.5bn, €54.4bn) some may argue that Singapore’s government is straying from its own free-market ethos. However, as the country’s finance minister, Heng Swee Keat, observed: “This extraordinary situation calls for extraordinary measures. We have saved up for a rainy day. The Covid-19 pandemic is already a mighty storm, and is still growing.”
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